FDI in services sector up by 55% in April-May

India’s foreign direct investment (FDI) inflows into the services sector went up by 55% to $910 million (Rs 4,053 crore) during April-May this fiscal, according to the industry ministry’s latest data.

The financial and non-financial services sector had attracted FDI worth $587 (Rs 2,643 crore) during the same period of 2010-11.

According to experts, the uncertain economic conditions in the western markets are creating opportunities in emerging economies like India.

"Foreign investors are looking at India as western markets are reeling under debt crisis," KPMG Executive Director Krishan Malhotra said.

Overall FDI inflows during the two months of the current financial year jumped by 77% to $7.78 billion from $4.39 billion in the same period of previous fiscal.

The Commerce and Industry Ministry had said that the recent trend of dip in FDI inflows appears to have been reversed in the current financial year.

However in 2010-11, foreign investment in the services sector, which contributes over 50% in India's GDP, declined to $3.29 billion from $4.39 billion in 2009-10.

Despite the increase in FDI in services sector, drugs and pharmaceutical segment with $2.94 billion topped the chart in attracting maximum investment during the two months of current fiscal.

Power was the third best sector, attracting $582 million investment, followed by automobile ($412 million), construction ($252 million) and housing and real estate ($249 million), the data said.

During the period, the highest FDI of $2.46 billion came from the UK, followed by Mauritius ($2 billion), Singapore ($1.35 billion) and Japan ($367 million).

The government is making sustained efforts, including involving stakeholders in policy formation, to make the investment regime more attractive and investor friendly.

The government is considering liberalising FDI regime in sectors like defence and multi-brand retail.